Customs, Excise and Gold Tribunal - Delhi
Punjab Beverages Ltd. vs Collector Of Central Excise on 10 November, 1995
Equivalent citations: 1996(81)ELT673(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. M/s. Punjab Beverages Pvt. Limited have filed this appeal against the order-in-appeal dated 15-9-1991 passed by Collector of Central Excise, Chandigarh upholding the order of the Assistant Collector of Central Excise, Amritsar whereby he had confirmed duty demand of Rs. 69,432.60. The duty demand was made on the ground that the appellants had not accounted for crown corks which have been received by them as inputs in the manufacture of their final product, Aerated Water. It was held that the wastage of 150882 crown corks during the period 1-3-1987 to 30-9-1987 had not been disposed of by them in the manner set out in Rule 57F(4) of the Central Excise Rules, 1944 governing modvat facility.
2. Heard Smt. Archana Wadhwa, learned counsel for the appellants and Shri Y.R. Kilania, learned Departmental Representative.
3. The main thrust of the argument of the learned counsel is that the wastage of crown corks in the course of manufacture of Aerated Water is an unavoidable phenomenon which had been accepted by the department itself in several proceedings. In many cases such waste of crown corks had been taken note of by the department and no proceedings had been initiated. In the present case demand of duty has been raised on Aerated Water alleged to have been manufactured using the unaccounted crown corks and cleared without payment of duty. The quantity of such alleged unaccounted quantity of crown corks has, in fact, been arrived at by the Department only from their own periodical submission of RT-5 Returns. In the adjudication order passed by the Assistant Collector not a single crown caps had been allowed the benefit claimed by them on the ground that such damage had arisen during manufacture process. It was strongly contended by the learned Counsel that demand of duty under Rule 57-1 of the Central Excise Rules could not be applicable in respect of Aerated Water which has been alleged to have been produced by them using inter alia the crown corks in question. She submitted that the said Rule would only apply to disallowing or recovering some Modvat Credit on inputs and not extend to duty demand on the final product. There is no allegation of suppression or mis-statement and the demand would not survive for the period beyond six months. The learned Counsel contended that this Rule 57F(4) as it stood at the material time would not really be applicable in their case as they were eligible for the benefit of Rule 57D(1). This position has actually been considered by the Assistant Collector in his order. As regards the allegation against them that they had not submitted any statement to the department regarding the destruction of damaged crown corks and that no destruction had taken place under departmental supervision, she submitted that they were not required to make such an application. In fact, the damaged crown corks in question were still available when the proceedings were launched against them and they referred to the availability of the damaged quantity of crown corks in their factory during the adjudication proceedings. It was open to the department to have verified the same. She then relied upon the Tribunal decision in the case of Collector v. Ludhiana Bottling Co. reported in 1992 (59) E.L.T. 327 and submitted that this case is on all fours with the present matter and pleaded that the appeal may be allowed following the ratio laid down in the above case.
4. Shri Y.R. Kilania, learned Departmental Representative reiterated the conclusion reached by the authorities below in their respective orders and pleaded that the appeal may be dismissed and the impugned order upheld. He had no specific reply when his attention was drawn to the contention raised by the learned counsel that the demand of duty on the final product has been raised invoking Rule 57-1 of the Central Excise Rules which is applicable only in respect of the Modvat Credit taken in respect of the inputs.
5. I have considered the submissions. I have gone through the appeal and the impugned order. The case relied upon by the learned counsel was confined to the question of admissibility of Modvat Credit in the case of crown corks damaged in the course of manufacture of Aerated Water. It was held that credit could not be disallowed in respect of crown corks rendered unfit during the process of filling of beverages which are considered to be waste. The present case is not for disallowing the credit. In fact the demand is of duty on the final product, Aerated Water, calculated with reference to the quantity of crown corks which admittedly were reported by the appellants themselves as waste which had arisen in the course of manufacture of their final product. The statutory provision under which duty has been demanded on Aerated Water is squarely not applicable as the rule in question, 57-1 extends only to Modvat Credit which may have been allowed wrongly or aviled of wrongly and which may be held to be inadmissible. The allegation of manufacture of Aerated Water of such quantity as would correspond with the quantity of crown corks which are held to have been not accounted is not supported by any facts or established by any inquiry. The product in question requires for its manufacture a number of other item besides crown corks. No inquiry seems to have been made in regard to the procurement and utilisation of such material and the clearance of the final product without payment of duty. It is an accepted position that crown corks do get damaged during the course of filling up of Aerated Water in bottles. The demand of duty without allowing even a single crown cork as waste is clearly untenable. Based on this single item no assumption could be made that they had manufactured Aerated Water as alleged and cleared them without payment of duty. It was also pointed out by the learned counsel that the quantity of crown corks which had been damaged during their operation and which are the subject matter of the present proceedings constitute a very small percentage of their total production requirements and that they clear appreciable quantity of aerated water bottles and pay large amount of duty. There is no indication in the findings of the authorities below that the quantity of crown caps which had been reported as waste or damage arising during the manufacturing process and which had been reported by them in their RT-5 quarterly returns were abnormal which could not be treated as normal wastage. There is no investigation in this matter and accordingly no finding also. In these circumstances, I find that the impugned order is not sustainable at all and is to be set aside. Accordingly, I allow the appeal and set aside the order-in-appeal.